State Gop Leaders Ponder Tax Breaks For Gas, Utilities

November 9, 2005|By Mark Hollis Tallahassee Bureau and William E. Gibson of the Washington Bureau and Researcher Jeremy Milarsky contributed to this report

Despite this year's record oil industry profits, Florida Republican leaders began touting tax breaks to petroleum companies, gasoline retailers and electric utilities to entice them to install power generators at gas stations and to bury more electricity transmission lines.

The tax-break push in Tallahassee and Washington coincides with demands from Democratic legislators for investigations into power poles failure throughout South Florida during Hurricane Wilma.

State Sen. Steve Geller, D-Hallandale Beach, is calling for legislative hearings into Florida Power & Light Co.'s maintenance of utility poles, following reports by the South Florida Sun-Sentinel that the poles were not properly repaired after previous hurricanes.

Legislators are clamoring to pass these and other emergency actions as a political response to Wilma. But most of the legislation won't be heard until next year, long after tempers raised by long gas station lines and power outages Wilma caused have faded.

The lines resulted because few South Florida gas stations had generators to run their pumps when power went out.

Industry officials say the cost of putting in generators varies but it may average more than $75,000 for each of the region's 2,800 stations. Some GOP legislators and state officials say economic incentives to the industries may help cover the costs, while Democrats like Geller say the upgrades can at least begin at new or newly upgraded stations.

Gov. Jeb Bush is cautioning legislators about requiring expensive gas station upgrades and electricity line burials, urging more study of tax breaks and other solutions.

"I think we need to look at the consequences in terms of cost," Bush said of the various proposals, adding that "incentives" to the industry need to be part of the study.

Florida Attorney General Charlie Crist, a Republican candidate for governor, hosted energy and health care industry leaders at a meeting on Wednesday about possible legislation dealing with mandating gas station generators and underground power lines.

Crist, state Sen. Jeff Atwater, R-Palm Beach Gardens, and other Republicans emerged from the private talks insisting that the state should be cautious about imposing more requirements on the impacted industries. They also insisted financial incentives should be part of the government response.

"You can talk about mandating [generators] at every station, but I don't know if that's the way to go," said Crist. "You can also talk about ... giving a sales tax exemption or credit for people ... to put in a generator at their gas station so it doesn't cost a gas station owner."

In Congress, U.S. Rep. Clay Shaw has prepared legislation that would give a federal tax break to utility companies that bury existing above-ground power lines. His bill would allow power companies to immediately deduct the cost of burying the lines. Current law allows companies to write off the depreciation of these costs over 15 years for lines placed in service since April 11, or 20 years in the case of lines placed in service prior to April 11.

Shaw also has proposed legislation to authorize tax-free bonds to help utilities pay for buying power lines. His proposals are not expected to voted upon until 2006.

"This would be voluntary," said Shaw, R-Fort Lauderdale. "If you mandate something like this, you are liable to be mandating terrific light bills."

State and federal officials say burying power lines would eliminate potential hazards as well as make hurricane-prone regions less vulnerable to outages. They acknowledge the changes could be costly.

David Mica, executive director of the Florida Petroleum Council, said any government mandates of upgrades at fuel stations could hurt gas retailers' abilities to pay for other environmental upgrades.

Several Florida House Democrats reacted skeptically to the calls for tax breaks to the industries. Rep. Dan Gelber, D-Miami Beach, and Rep. Ron Greenstein, D-Coconut Creek, both said this year's record oil industry profits suggest that the petroleum industry can afford to subsidize their retailers' costs of making upgrades, including power generators.

Financial incentives to power companies for burying power lines also drew skepticism from the Democrats, some of whom noted that the state's power suppliers, including FPL, are also major campaign contributors.

Research by the Sun-Sentinel shows that FPL and its various employee political committees have given, on average, more than $181,000 a year each year since at least 1996.

William E. Gibson of the Washington Bureau and Researcher Jeremy Milarsky contributed to this report.

Mark Hollis can be reached at mhollis@sun-sentinel.com or 850-224-6214.